By Carmine Coppola
Have you ever wondered how you can legally reduce your tax bill and keep more of your hard-earned income? Tax assets represent one of the most underutilized tools in a high-net-worth individual’s financial arsenal. By harnessing the power of deferred tax assets, you can not only save on taxes today but position yourself for greater financial growth tomorrow.
At Strata Capital, our team and has spent the last decade helping high-net-worth corporate professionals optimize their financial strategies, including harvesting tax assets. Let’s dive into what tax assets are, how they work, and why they’re a critical component of your long-term wealth strategy.
What Are Tax Assets?
At their core, tax assets are financial tools designed to reduce future tax liabilities. Think of them as a strategic buffer—a reservoir of potential savings that can be tapped when the timing is optimal.
There are two main categories:
- Deferred Tax Assets: These arise when you’ve overpaid taxes or incurred losses in a given year. These losses can be carried forward to offset future taxable income.
- Tax Credits: These directly reduce the taxes you owe, much like a gift card for your tax bill.
Today, we’ll focus on deferred tax assets. They offer control and flexibility in managing tax liabilities over time—a critical advantage for high-net-worth individuals.
Why Deferred Tax Assets Matter
Deferred tax assets aren’t just a tax-saving measure; they’re a strategic lever to enhance your financial picture.
They allow you to offset gains from investments, significantly reducing your tax obligations. For example, if you sell a stock with a $100,000 gain (with a 15% tax rate), you’d owe $15,000 in taxes. However, if you also have $50,000 in unrealized losses, selling those positions could cut your tax bill in half.
They enable tax deferral for greater growth. By deferring taxes, you can keep more of your money invested, allowing it to compound over time. This creates a “tax asset balance” that can be carried forward, providing long-term financial advantages.
Case Study: Strategic Tax Asset Harvesting
Let’s say you have a $100,000 unrealized gain on a stock and a $300,000 carryforward loss from prior years. By applying $100,000 of that loss against the gain, your net tax liability is reduced to $0.
This strategy isn’t limited to stocks. The same approach can extend to other areas, such as real estate investments or the sale of a business.
For those in high-tax states like New York, the benefits are even greater. New York allows you to carry forward losses at the state level as well, creating additional savings opportunities.
Reducing Ordinary Income Taxes
Deferred tax assets aren’t limited to investment gains. In many jurisdictions, you can use them to reduce your ordinary income tax liability as well.
For example, up to $3,000 in capital losses can be deducted from your ordinary income each year. While $3,000 may seem small, over time, it adds up and becomes another layer of financial efficiency.
Risks and Considerations
No financial strategy is without risks, and tax asset harvesting is no exception.
This approach requires a deep understanding of tax laws, timing, and how it fits into your broader financial plan. Missteps could lead to missed opportunities or unintended tax liabilities.
This is why it’s essential to work with a trusted advisor who specializes in tax optimization for high-net-worth individuals.
The Strata Capital Advantage
At Strata Capital, we don’t just harvest tax assets—we craft personalized strategies that integrate them into your broader financial goals.
Our concierge-level service ensures every aspect of your wealth management is aligned, from investment planning to estate strategies. By acting as the central conductor of your financial team, we simplify complexities so you can focus on your career, family, and legacy.
Take Action Today
Tax assets are one of the most powerful yet underutilized tools in your financial toolkit. By understanding and gathering them, you’re not just reducing taxes—you’re creating opportunities for growth and financial freedom.
If you’re ready to unlock the full potential of tax assets, schedule a consultation with Strata Capital today. Together, we’ll pull back the curtain on the financial industry and create a higher standard for your wealth management.
Strata Capital is a wealth management firm serving corporate executives, professionals, and entrepreneurs in the New York Tri-State Area, focusing on corporate benefits and executive compensation. Co-founded by David D’Albero and Carmine Coppola, the firm specializes in making the complex simple to ensure clients feel confident in their financial decisions. They can be reached by phone at (212) 367-2855, via email at carmine@stratacapital.co, or by visiting their website at stratacapital.co.
Cornerstone Planning Group, Inc., (“CSPG”) is an SEC registered investment advisory firm. The information contained herein should not be construed as personalized investment advice and should not be considered as a solicitation for investment advisory service. The information (e.g., tax ) provided is believed to be accurate however CSPG does not guarantee or otherwise warrant such information. For more information regarding CSPG you can refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov) and review our Form ADV Brochure and other disclosures.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.